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Bank of America (BAC) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3 min read

In the latest trading session, Bank of America (BAC) closed at $33.66, marking a +1.78% move from the previous day. This change outpaced the S&P 500's 0.04% gain on the day. At the same time, the Dow added 0.19%, and the tech-heavy Nasdaq gained 0.28%.

Coming into today, shares of the nation's second-largest bank had gained 17.19% in the past month. In that same time, the Finance sector gained 5.51%, while the S&P 500 gained 3.84%.

BAC will be looking to display strength as it nears its next earnings release, which is expected to be January 19, 2021. The company is expected to report EPS of $0.55, down 25.68% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $20.26 billion, down 9.35% from the year-ago period.

Investors might also notice recent changes to analyst estimates for BAC. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 9.29% higher within the past month. BAC is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, BAC currently has a Forward P/E ratio of 15.01. For comparison, its industry has an average Forward P/E of 13.67, which means BAC is trading at a premium to the group.

Meanwhile, BAC's PEG ratio is currently 2.14. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Banks - Major Regional industry currently had an average PEG ratio of 2.14 as of yesterday's close.

The Banks - Major Regional industry is part of the Finance sector. This group has a Zacks Industry Rank of 76, putting it in the top 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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Bank of America Corporation (BAC) : Free Stock Analysis Report
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Zacks Investment Research